Caption: Main Street Hub has 175 employees, 3,000 customers, and $14 million dollars of venture capital, but started as a humble class project at Stanford University.

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Caption: The service, created by founders and Co-CEOs Matt Stuart and Andrew Alison helps small businesses, from barbers to restaurant owners, manager their social media profiles.Photos by Main Street Hub

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Caption: Initially pitched as a DIY software tool, the course at Stanford helped the founders rethink it as a "do-it-for-you" service along the lines of H&R Block.Photos by Stanford University

6 Invaluable Lessons for Startups From Stanford’s Famed Design School

Main Street Hub has 175 employees, 3,000 customers, and $20 million of venture capital, but started as a humble class project at Stanford University. Image courtesy Stanford University

Businesses, especially startups, are getting slammed by a shortage of designers. Venture capital firms are setting up programs to link talented creatives with firms, entire companies are being acquired just to capture the design talent, and Stanford University is attempting to address the shortfall by teaching “design thinking” to smart people from all walks of life.

Stanford MBA candidates Andrew Allison and Matt Stuart had impressive credentials—Allison worked as a political speechwriter and Stuart had been an investment banker. However, both wanted to contribute more to the world in the form of a startup that helped small businesses thrive. The only problem was they had no design expertise—even coordinating an IKEA run was beyond their skill set. “My apartment literally has noting in it but a bed, dresser, night stand, [and a] big living room with zero furniture,” says Stuart.

Despite their lack of design acumen, they founded a startup that would help connect local businesses to customers. They developed a custom web app, signed up 30 pilot customers, and even raised some money to invest in development. Their idea was solid and simple: create local directories for small businesses. An auto body shop, for instance, could set up a profile on their site and drive potential customers to it. It was a solid idea, but it was flailing. So the pair enrolled in a design course at Stanford’s d.School and learned valuable lessons that helped them transform it into a thriving service that manages social media for small businesses.

The course they took is called Launchpad: Design and Launch your Product or Service Zero to Revenue in Ten Weeks and aims to teach design thinking strategies like ethnographic research and rapid prototyping. Instead of focusing effort on classroom assignments, the lessons are applied directly to growing businesses and the class has produced some resounding successes. Of the 40 teams that have formed so far, successes include Pulse, a social news reader sold to LinkedIn for $90 million in 2012 and another company that was acquired by Dropbox. In total, 13 teams have gone on to raise venture capital and half a dozen more are still operating.

Through what they learned in the course, Stuart and Allison realized they were approaching the problem all wrong. It turns out what their customers really wanted was a way to manage comments on pre-existing, popular social networks like Yelp, Facebook, and Twitter, instead of getting a new channel to deal with. Additionally, these mechanics didn’t want to deal with the social network du jour; they wanted to outsource the job, like they do with taxes. Stuart and Allison reoriented the service and a few short months later aced the course.

The service, created by founders and Co-CEOs Matt Stuart and Andrew Allison helps small businesses, from barbers to restaurant owners, manage their social media profiles. Image courtesy Main Street Hub

Before long they earned an even better mark—a thriving company called Main Street Hub that currently counts over 3,000 customers, 175 employees, and a $14 million investment from Bessemer Venture Partners, the VC firm behind Yelp, Shopify, and Pinterest.

For those that can’t decamp to Stanford to learn these skills firsthand, the team at Main Street Hub have shared some of the secrets of their success.

Take Empathy to the Extreme
Ask any small business owner if they’d like to be more successful on social media and of course they’ll say yes, but that’s not the most important question. Instead, Stuart and Allison should have asked if they had the time to dedicate to Facebook marketing. The answer in short: no.

“We’d go into their shops and spend hours and hours with them in hopes of getting them in front of their computer,” says Allison. “We wanted to get their feedback and get them on board, but we spent most of those hours chasing them around the shop under car, behind a desk, and talking to employees.”

The first version of the product was well-designed by any standard measure. The information architecture was solid and the visuals were clean. Usability experts would have a hard time identifying what was wrong with their service. The problem was that it was built around faulty assumptions.

“That old product required customers to manage their own presence, and most mechanics don’t have the time or resources to do that,” says Allison. “Even if it would solve their biggest problem, obtaining new customers, they will not DIY their online presence.”

This was a striking realization for a pair of Silicon Valley stars who were rarely offline for more than a few minutes. Moreover, many of their customers had no idea what a hashtag was, nor did they care. “Ultimately, designing a great solution is just a manifestation of empathy,” says Allison. “Truly understanding the customer’s needs and problems.”

Look for Inspiration in Other Industries

Instead of trying to make an easier DIY software tool, Stuart and Allison created a “do-it-for-you” service. Think of it like tax prep—people don’t want a better interface to deal with the IRS, they want to bring a shoebox full of receipts to an accountant and let them handle the details. Strange as it may sound, for many, managing social media is a chore, not a treat.

“When the pivot was made to ‘do-it-for-you,’ we really looked at what had previously gained traction in local,” says Stuart. “All widely adopted marketing products for local businesses from the past 30 years were “do-it-for-you” solutions: print advertising is a hands-off experience for a business owner, ‘webmasters’ deliver finished and infrequently updated sites, online ad networks earn the bulk of their SMB ad dollars from resellers and agencies instead of direct spend, and the early daily deal success was built with hands-on sales, account management, and editorial staff.”

Initially pitched as a DIY software tool, the course at Stanford helped the founders rethink it as a “do-it-for-you” service along the lines of H&R Block. Image courtesy Stanford University

Now, for $299 a month, Main Street Hub’s crack team will respond to snarky tweets directed at their clients promptly and professionally. The design output isn’t a new kind of user interface, instead it’s a series of algorithms and reports used by account managers. It’s still a design process, just not one that will set Dribbble on fire.

User Research Is Fine. User Behavior Is Better

Surveys and positive customer feedback are great, but they don’t pay the server bills. An important lesson from the class was gauging success not by what customers said, but by how willing people they were to open their wallets. In other words, user research has its limits. User behavior though? It teaches a lot more than words ever will.

Allison and Stuart admit that most of the users of the first version of their product let the subscription lapse, but once the “do-it-for-you” change was made, the purchasing behavior followed quickly. “The first few customers we showed it to paid us with cash on the spot,” says Stuart. “One guy was three dollars short, but we gladly accepted his payment.”

Don’t Wait for Feedback

Creative people are often sensitive and hesitant to show off their ideas before they’re fully formed. “If you’re building the wrong product, you’ll hear no,” says Allison. “You might as well hear it as early as you can.” Laboring under false assumptions cost Stuart and Allison time and money that could have been saved if they had sought out negative feedback earlier.

Find the Paradigms That Deserve to Die

Plenty of services offer to help business hide negative reviews, but Main Street Hub takes a different approach—embracing them. “We received a call from an auto repair shop owner who said that he was getting new customers as a result of a negative review on Yelp because of how Main Street Hub responded to it,” says Stuart. “His new customers were impressed by how much he cared about his customers’ experience and it shaped how we think about the opportunity for our customers in a response to a negative review.”

Never Stop Iterating

While they’ve figured out the big picture, Stuart and Allison are far from finished when it comes to refining their service. “We’ve now crafted more than a million messages in total and have learned from our data what type of content is most engaging for different types of businesses,” says Stuart. “We’ve been able to achieve engagement rates that are five times the industry average as a result.”